Franklin Templeton Submits XRP ETF Application to the SEC

Franklin Templeton has filed an S-1 registration form with the U.S. Securities and Exchange Commission (SEC) to launch an XRP ETF. The fund, which would be listed on the CBOE BZX Exchange, offers investors access to XRP, currently the fourth largest cryptocurrency based on market capitalization. The ticker symbol has not yet been determined, as revealed in Tuesday’s application.

What is clear, however, is that Coinbase Custody will act as the custodian of the fund’s XRP holdings, with Coinbase as the prime broker. In addition, CSC Delaware Trust Company will take on the role of trustee. The shares are continuously offered at the net asset value (NAV), with only authorized participants able to create or redeem creation units. For the calculation of the NAV, the fund uses the CME CF XRP-Dollar Reference Rate.

Finally, Franklin Holdings will sponsor the fund and cover most regular business expenses in exchange for a sponsorship fee. The fund is set up as an emerging growth company under the JOBS Act.

Risks and Structure

The application points to various risks, including the volatility of XRP, uncertainties in regulation, potential security issues, and complex tax treatments. The fund will not include forked assets or “incidental rights” of the XRP blockchain. This makes it a focused but challenging venture.

This initiative follows the recent approvals of spot Bitcoin ETFs and marks a new attempt to introduce a spot crypto ETF for XRP. The SEC still needs to review and approve the application before the fund can start trading.

As mentioned, this is not the only application for an XRP ETF. Earlier this year, in February, the CBOE BZX Exchange already filed applications for XRP ETFs from Bitwise, 21Shares, and Canary Capital, indicating a growing interest following the successes with Bitcoin and Ethereum ETFs.

What is at Stake?

The XRP ETF from Franklin Templeton could be a significant step for institutional adoption of XRP. The outcome depends on the SEC decision, which may take some time. It is also exciting to see which applicant will first receive approval for their XRP ETF. However, we patiently await the outcome.